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Unit 9: Small Groups Organizations

year or have worked part-time is counted as fractions of AWU. Apprentices or students Notes
engaged in vocational training under an apprenticeship or vocational training and maternity
or parental leave are not counted.

9.1.5 Legal Value of the Definition
The definition of micro, small and medium-sized enterprises is binding only for certain
matters, such as state aid, implementation of the Structural Funds or Community programmes,
particularly the Framework Programme on Research and Technological Development.

In small scale industrial the investment in fixed assets or on hire purchase
should not be more than ` 10 million.

9.2 Classification of Small-Scale Industries (SSIs)

A common classification is between traditional small industries and modern small industries.
Traditional small industries include khadi and handloom, village industries, handicrafts,
sericulture, coir, etc. Modern SSIs produce wide range of goods from comparatively simple
items sophisticated products such as television sets, electronics, control system, various
engineering products, particularly as ancillaries to the large industries. The traditional small
industries are highly labour-intensive while the modern small-scale units make the use of
highly sophisticated machinery and equipment. The share of modern industries in the total
output of this sector was 74% in 1979-80 but their share in employment was only 33%.
Obviously, these industrial units would provide higher labour productivity. One special
characteristic of traditional small-scale industries is that they cannot provide full time
employment to workers, but instead can provide only subsidiary or part time employment
to agricultural labourers and artisans. Among traditional village industries, handicrafts
possess the highest labour productivity, besides handicrafts make a significant contribution
to earning foreign exchange for the country. Nowadays Indian small-scale industries (SSIs)
are mostly modern small-scale industries. Modernization has widened the list of products
offered by this industry. The items manufactured in modern Small-scale services and Business
enterprises in India now include rubber products, plastic products, chemical products, glass
and ceramics, mechanical engineering items, hardware, electrical items, transport equipment,
electronic components and equipments, automobile parts, bicycle parts, instruments, sports
goods, stationery items and clocks and watches.

During 1979–80, traditional small-scale industries accounted for only 135
of the total output but their share in total employment was 56%.

9.3 Role of Small-Scale Industries in Indian Economy

The small-scale industrial sector plays a pivotal role in the Indian economy in terms of
employment and growth. It has recorded a high rate of growth since Independence in spite
of stiff competition from large-scale industries. There are several important reasons why
these industries are contributing a lot to the progress of the Indian economy:
9.3.1 Production
The small-scale industrial sector plays a vital role in the growth of the country. It contributes
almost 40% of the gross industrial value added in the Indian economy. It has been estimated
that a million of investment in fixed assets in the small scale sector produces 4.62 million
worth of goods or services with an approximate value addition of ten percentage points. The

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